Youve already heard about Charlie Crists New Insurance Plan. A rewrite of the historical record ignoring some facts and distorting others to obfuscate damage from the first insurance plan he pushed through in early 2007.
I and many of my colleagues were firsthand participants in the debate on all the bills of relevance, including: Crists Jan. 1, 2007, package, HB 1A; SB 2044, which he vetoed against the advice of his own appointed commissioner, and; SB 408, which finally got the ship back on course under Rick Scott. In this latest campaign piece, team Crist mischaracterizes the language, intent and impact of all three.
Dont trust me on this. See for yourself which is accurate and which side distorts. You can do this by reading both the Crist piece and Rick Scotts response before you decide.
In the meantime, here are some thoughts to keep in mind.
After the '04 and '05 storms, only one major insurer failed: the overexposed and mismanaged Poe Financial. There was one insignificant other: the much smaller American Superior. But, the point is, Florida survived the worst hurricane onslaught in American history. Eight hurricanes hit our peninsula in 16 months, one every 60 days. Only one (and a half) insurer failure of any significance? Amazing.
Then came Charlie Crist eyeing Washington and looking for a crisis to solve.
It didnt matter that his solution was a Ponzi scheme. Or that irresponsible rate roll-backs would cause sticker shock increases down the road. He would be gone.
There were five times as many (10 or 11 depending on who you talk to) insolvencies from Crists HB 1A -- his solution -- than from the temporary problem he was trying to fix. All without even one hurricane.
It didnt matter that assessments would burden those who didnt even own property.
It didnt matter that false and inflated wind mitigation credits would deceive homeowners into thinking their homes were safer.
It didnt matter because Crist would have a permanent job in Americas most tenured institution, the U.S. Senate.
One example of distortion in the Crist document is seen in its only reference to Floridas sinkhole crisis, as follows:
In signing SB 408, Rick Scott allowed insurers to increase sinkhole coverage deductibles to as much as 10 percent. Most insurers today, including two of the three largest in Florida, now only write policies with a 10 percent deductible on sinkhole premiums. Such a large deductible results in a substantial decrease in coverage.
Really? Thats it?
No mention that there was a crisis?
No mention that it was Crists HB 1A that divided sinkhole coverage between real sinkholes (catastrophic collapse) and sinkhole activity (driveway cracks) so eventually consumers could reject the latter altogether, which they now almost all do.
No mention that the 10 percent deductible applied only to driveway cracks and that deductibles for true sinkholes remained unchanged in SB 408, the same as on all other perils except wind.
And, heres the kicker. Charlies HB 1A included language on a 10 percent deductible for hurricanes -- 10 percent of the dwelling amount! He chose not to change that while at the same time allowing a 2 percent hurricane deductible for dwellings valued as low as $100,000.
After Crist took office sinkhole claims exploded, especially in Sinkhole Alley. The average claim payout $140,000. And, in 80 percent of the cases there was no sinkhole. The money was spent on vacations, new cars or to pay off a mortgage. Why?
During his first two years in office, trial attorneys and public adjusters made $21.4 million in fees in closed sinkhole cases. OIR reported that the average payment to an attorney in a closed sinkhole case was $32,237, and the average payment to a public adjuster was $22,384 per sinkhole case.
Crists campaign contributors were directly benefiting at the expense of those their candidate promised to help. One chief beneficiary was later to become Crists employer, Morgan & Morgan.
In 2010 Citizens only took in about $30 million in sinkhole premiums but paid out $245 million in sinkhole losses. Rates soared to more than $4,000 to $5,000 per policy from the only insurer still willing to insure sinkholes at all: Citizens.
Fortunately, thats all history now. Crists history!
Today fraudulent sinkhole claims are pretty much gone. Rates have been slashed. The solvency crisis is no more and assessments from the Cat Fund and Citizens are as over as Crists Senate campaign. And
... Rates overall are going down -- for Citizens and the private market.
For almost seven years Ive been working (and voting) to change things in Floridas property market to the way they used to be The Way We Were.
In November, finally, Ill be voting to keep things the way they are.
Scott Johnson, AAI, CAE, is president of Johnson Strategies LLC, which specializes in planning, communication and advocacy for a wide range of interests focused in the property and casualty insurance field. The cartoon is the work ofLars-Erik Robinson, new to the Johnson Strategies' team.
